Agricultural practices based on cheap abundant oil are not sustainable. If we farmers are to feed the world's growing population we must change to a system of farming that IS sustainable and it must be done very soon.

February 8, 2008

9th Book Excerpts

Another Day on the Farm:

Snowed and blowed most of the night. Getting nasty out there. The forecast is for more of the same for a day or so. The snow banks thrown up by the snow plows are about six feet high in some places. If it drifts full behind them the roads could be blocked for a few days.

Current Rant:

Are you aware that the North American Free Trade Agreement (NAFTA), which our MP’s (Moron Politicians) in Ottawa signed with the US a while back, contains a clause that Canada must continue to supply the same proportion of its oil and gas resources to the US in future years as it does now? And … that we are currently export approximately 60 percent of our natural gas to them?

Brilliant!

Canadians heat almost three quarters of our homes with natural gas and propane heats a majority of the rest. Furthermore, fertilizer prices are skyrocketing in the wake of rising petroleum prices and declining natural gas supplies. Wonder what’s going to happen as Canada’s needs continue to increase while our supply steadily declines.

Are our government leaders actually so stupid that they couldn’t see this coming … or is it possible that someone got paid off? (I’m trying to remember who our Prime Minister was when the NAFTA agreement was signed.)

Ninth Excerpt from “Farmageddon”:(My latest unfinished book)

Survivalism

The word “survivalist” conjures up all sorts of images. A popular one is that of a scraggly bearded wild-eyed hermit who spends the better part of his time hunkered down behind the foot-thick door of his bunker, protecting his stuff from anyone that comes along by blowing their brains out with his 357 Magnum.

My image is a little different. To me, a bona fide survivalist is a rational person who prepares in advance for potential emergencies, be they large or small. My survivalist prefers self-reliance over dependency on others. Self-reliant people try not to be dependent on governments or societies for aid in emergency situations.

The concept of survivalism is not limited to catastrophic events. Sensible survivalists plan for small emergencies as well. In fact, they would normally focus more on being prepared for the short-term emergencies of daily life of a local nature.

Long term and widespread disasters are obviously of concern to survivalists also, and they are more difficult and expensive to prepare for. But, unfortunately, most people are not able to make adequate preparations for major catastrophes of long duration, for the simple reason that: Most people live in cities.

Even for those who have the necessary financial, material and intellectual resources, including adequate space for storing provisions, preparing for long-term survival is neither a simple thing to do nor an easy decision to make. The ultimate success or failure of any survival plan depends largely on the degree of commitment one is willing to make. Those who are not willing to make sacrifices now, in the hope that their future might be more secure, are not truly committed survivalists.

One negative aspect of becoming a “survivalist” is the risk of becoming the butt of neighbourhood jokes. Survivalists tend to be looked upon as “Odd” or “Nuts”, by those who do not share their views. A thick skin helps, but a crusade to convert those who taunt is generally not a good idea. If disparagement becomes unbearable, you can always pray for a catastrophe, if vindication is that important. Then, when the detractors come begging at your door, starving and freezing to death, just think how satisfying it will be to thumb your nose and say, “Who’s laughing now?”

Stocking up for emergencies is not the same as hoarding. Stocking up while supplies are plentiful is intelligent planning. Hoarding is a greedy reaction to shortages. Timely purchases of survival items assures better variety in greater quantities. When an emergency arises, supplies will disappear very quickly, considering that even in normal times there is only a few days stock on the shelves of the average grocery store. Unfortunately, our society is geared to having long supply lines of materials, extending across continents and oceans, to constantly replenish the shelves of our stores.

Emergency survival preparation should actually be regarded as a social obligation. If every household is prepared for emergencies then the whole of society is more secure. The Mormon Church advocates having a two-year supply of non-perishable foods and supplies on hand at all times. While I’m not in total agreement with that idea, it certainly is not without merit. The main fault I find with the plan is that you would apparently be eating two-year-old stuff all the time.

Just how far to go in preparing for emergency situations clearly depends on the severity and duration of the anticipated emergency, as well as one’s geographic location. A short-duration emergency, such as a temporary electrical power outage, is really just a nuisance, requiring little more than a flashlight, some candles and some patience. Preparing for catastrophic events that could disrupt normal life for a week or more, such as a hurricane or the mother-in-law moving in (pardon the redundancy), plainly calls for a more extensive survival kit. Preparing for global calamities goes way beyond mere survival kits — about midway between the Mormon’s plan and old Noah’s of biblical times, should do.

Since a major economic collapse would likely curtail both domestic production and imports, it would be a good idea, when shopping for non-food items, to buy things that wear out slowly and are repairable. If anyone finds a place to buy such things, please let me know.

Survival is not about running away from everyone else and building a fortress to protect one’s stuff. It’s not about arming ourselves to the teeth or bashing each other over the head. And, it’s not about eating two-year-old beans and rodents for the rest of our lives. It’s about becoming as self-sufficient as possible. It’s about learning the skills necessary to live comfortably under adverse conditions. It’s about making a living as independent of society as possible. It’s also about re-learning the skills of our grandparents.

Hopefully we will never be faced with conditions that force us to assume a survival mode of any kind. But, hope is a poor thing to stake your life on. Still, one would hope that, if and when a collapse comes, it will occur gradually enough to permit us to adapt to changing conditions over a period of time — a slow decline rather than a sudden complete crash.

There were other affairs of the heart as the school years slipped by, but my aspirations became a bit more realistic after the crush on my third grade teacher. I don't think the teachers were any less attractive, but by grade eight I noticed that the girls had definitely become prettier.

Girls have always been important in my life. The first was Betty Cooper, whom I have already mentioned. Another girl that caught my eye was a pretty little red-head named Colleen. I was in grade four, I think, and she was a grade behind me. We rode the same school bus and often sat together and talked, but she seemed more like my sister than a girl friend. I liked Colleen very much. She was friendly, intelligent and fun to be with. We did date a time or two in high school, but never seriously.

But the first girl that I really fell in love with was Shirley Sleight. She was a very pretty blonde girl. I first saw her one summer day, during school vacation, when I was about fourteen. A friend and I were riding our bikes to town and, as we rode past the old two storey grade school, we noticed two girls playing on the school fire escape slide. As we rode by, they teasingly waved to us. We stopped and talked. I knew right from the start that Shirley was the one for me. She was just about perfect, even the small birth mark on her left cheek seemed only to add to her pretty face.

Shirley was a very popular girl. She was one of the cheer leaders and was active in all sorts of school activities…it was hard to find her alone. I was one grade ahead of her, but there were times—ball games, school assembly meetings, and the like—when I found an opportunity to sit next to her. I talked to her at every opportunity, but it was a long time before our first night date.

When we did start dating, we usually just went to a movie. Shirley liked dancing, but I had never learned how (although she offered to teach me) and I was too embarrassed to admit that I had been taught that dancing was sinful. I have often thought how different my life might have been if it weren't for those so-called sins that so completely dominated my early life.

Thou Shalt Not…

I grew up in a very religious home. I can just vaguely remember when dad used to smoke a pipe…possibly I am just remembering pictures of him smoking. There were occasional hints from his brothers that indicated his language and behaviour, as a younger, man were not so pious, but from my earliest memories, he was a very religious man. The only time I ever heard him use a profane word was while he was recovering from a stroke in the latter years of his life.He was a "born again Christian" and lived his life accordingly.

My religious upbringing strongly influenced my life, both positively and negatively. In our home, we were forbidden to do many things that were considered sinful. Profanity, swearing, card playing, smoking, alcoholic beverages, dancing, attending movies or carnivals, even wearing lipstick, were forbidden. We could not attend school dances. We could not work on Sundays. We went to church every Sunday as well as evening church services and revival meetings as often as possible. In fact, most of our social life was church related. We had church people over for dinner and went to their homes for dinners. There were even occasional Prayer Meetings conducted in our home.

Although dad's intentions were unquestionably good, his strict religious ideals and demands were the cause of a good deal of discomfort, misunderstanding, embarrassment and fear in the lives of his children. He made his opinions known on a variety of sins, but he was especially adamant about the sin of adultery. I never figured out exactly why he was so obsessed with that particular "thou shalt not", but it was a subject that frequently came up in our household, usually with reference to some divorced person—grass-widow, as he called them—that attended our church. Mom used to shush him up sometimes…she didn't think it was an appropriate subject to discuss in front of us kids. We, of course, didn't have a clue as to what it was all about anyway.

My religious upbringing had a profound effect on my relationship with girls. By the time I graduated, Shirley and I were dating regularly. I had been allowed to use dad's car since my sixteenth birthday. A typical date would be going to a movie, having a snack and then going for a drive in the country. Soon the driving in the country evolved into parking in some secluded spot. Our relationship gradually became more intimate, until we were faced with the ultimate test of our moral upbringing. It is with very mixed feelings that I admit to being the one that chickened-out.

The Farm Problem—a term commonly used by economists to encapsulate a set of problems which are unique to farming—is typically defined by them as: "The relatively low income of farmers, compared with incomes in the non-agricultural economy, linked with the tendency for the farm prices to fluctuate sharply from year to year." Quite a mouthful, which sums it up neatly but incompletely. The problem also involves perceptions, politics, global trade, social structures and, probably most importantly, a lack of understanding or concern by the general population. This general lack of concern or understanding is the part I want to address.

The Farm Problem has been referred to for as long as I can remember. There was a farm problem back in the 1940's when I was a kid, though it was no doubt a bit different then than the current one. I suspect there always has been a farm problem and likely there always will be.

Frequently the problem has been related to overproduction. There is a false perception among individual farmers, that if they produce more their revenues will increase. This is true ... to a point. When individual farms produce more, and sell at the same prices as farmers who have not, they obviously stand to make relatively more than the other farmers. However, when farmers, as a group, increase the total production of agricultural commodities it tends to force the price of their produce down, along with their total revenues, because of over supply.

Since many farmers tend to follow the same expert advice, they often end up all doing more or less the same thing at the same time. Government agencies, such as federal and provincial departments of agriculture, under the guise of expert counseling, often distribute literature, offer seminars, et cetera, that encourage practices designed to increase production and efficiency. The obvious problem with such programs is that, if they are successful, the individual farmer ends up being no better off in comparison with the rest of the farmers.Consumers, on the other hand, become the beneficiaries of increased production, in the form of cheap food and fiber.

Artificially supported prices, resulting from governmental subsidy programs for example, often create incentives for expansion, which further contributes to excessive production of specific commodities … which, in turn, necessitates more governmental interference to help dispose of the resulting glut on the market. But, perhaps the unkindest cut of all, many government aid programs, intended to help preserve the family farm, have principally benefited the larger farming operations … many of which are owned by huge corporations. The net result is that the bulk of farm subsidies have been paid to fewer than one fifth of all farmers.

The rapid improvement in agricultural efficiency, over the past fifty years, has been one of the main causes of overproduction of farm commodities. Modern machinery, improved strains of seed, selective animal breeding, increased use of chemicals and extensive irrigation are among the technological advances that have expanded agricultural yields and improved efficiency while reducing labor requirements. But increased production does not greatly increase farm revenues because food consumption is relatively unresponsive to either lower food prices or increased consumer income. Total demand for farm goods remains roughly proportional to population size.

The demand for all farm products, as a whole, tends to be relatively price and income inelastic … people consume very little more food just because the price happens to be low. Therefore much lower prices are required to significantly reduce a surplus of agricultural products than would be necessary to reduce non-farm product surpluses. Thus, the widespread adoption of more productive agricultural technologies tends to drive farmers revenues down even more, unless foreign markets are found to consume the surplus. But, the point I want to stress is, in agriculture, increasing total production does not necessarily increase total revenues.

Agriculture, as far as I know, remains the world's largest industry and farming is often cited as the prime example of pure competition. A couple of centuries ago, nineteen out of twenty North Americans made their living by farming. Today approximately two percent of the population remain on the farm and economic pressures for farmers to leave the land remain undiminished. The tiny minority of North Americans who are farmers is also diminishing in proportion to all the farmers on earth, yet we are still able to generate large surpluses for export around the world.

According to well documented statistics, per capita farm income is generally less than in the rest of the economy and tends to be far more erratic as well. For a sixty year period, from 1930 through 1990, per capita farm income in North America varied from a low of thirty percent to a high of ninety percent of non-farm income. It peaked at ninety percent in the mid 1970s and then steadily declined to about fifty percent by 1990.

During the relatively prosperous period of the mid 1970's, many farmers were influenced to go heavily into debt for additional land and larger machinery. The resulting increased demand for land by farmers, coupled with that of urban sprawl et cetera, caused land prices to rise sharply. Then when farm revenues fell, after the short period of relative prosperity, the market value of farm land dropped by approximately thirty percent, in some areas, with the result that, for the first time in fifty years, North American farm debts exceeded farm land values. Huge debts and rising interest rates, put many farmers in the position of not being able to service their mortgage payments. The resulting foreclosures put many farmers out of business, and, incidentally, some farm community banks and small businesses as well.

It is difficult to pin down what a typical farm is because of the variety if kinds and sizes of farms. They range from small labor-intensive specialty farms of ten acres or less; to large grain farms with their seemingly endless fields; to vast cattle ranches stretching from horizon to horizon. But they all have a number of things in common: They are all competing for a finite amount of arable land. They are all subject to widely fluctuating commodity prices. They are all very susceptible to the vagaries of nature, in varying degrees.

To add to the confusion, the distinction between farmers income and their wealth can be deceptive. While farmer's incomes typically lag behind those of the urban population, the average farm owner is actually wealthier than the average non-farmer. On the other hand, larger farms account for a disproportionate share of total farm wealth, leaving many smaller farmers quite poor in comparison to average urban families. But, in general, the old cliché, "Farming is a way to live poor and die rich", sums it up very well.

Let me illustrate that point by using our own farm data as an example … as humiliating as it may be. I recently reviewed our farm account books and income tax records for the last ten years. During that period, which happens to be one of the best decades of our farming career, we (a partnership of two farm families) have had an average annual net income of approximately forty thousand dollars, before taxes. To state that in another way, forty thousand dollars, in this case, represents the salaries of two full-time farmers for twelve months work…or, for example, about the equivalent of one school teacher's annual income for nine or ten months work. However, in the farmer's case, it represents not only the take-home wages for his manual labor but also his management salary and the interest on his investment. In the teacher's case, it simply represents the labor salary, because additional people are employed as school managers, and neither the teachers nor school managers are required to invest a dime in the school's assets. (Obviously, there are many other occupations that would serve equally well as comparative examples to illustrate my point…just about any occupation other than self-employment, for that matter.)

But…there's more. The forty thousand dollar net income figure, for our farm, includes all windfall income as well as all government subsidies and other governmental farm aid income. So, everything considered, the net income from the sale of farm produce (excluding windfall and government aid income) amounts to approximately eighteen thousand dollars annually, on average, for each of our two households. This is the amount that must cover each household's living expenses (food, clothing and shelter), the construction and maintenance of their home, the children's education, the utilities, the car expenses, entertainment…in short, all personal expenses for the farmer and his family.

Now, to view it from a different perspective, in our example case that magnificent sum represents the net return from sixteen hundred acres of land, two to three hundred breeding cows and somewhere between two and three hundred thousand dollars worth of machinery and structures—a total investment in excess of a million dollars—PLUS the labor of two farmers. It doesn't take a rocket surgeon to see that we would be much better off, financially, to invest that amount of money elsewhere at three or four percent interest. Live poor…die rich?

But, to get back to the Farm Problem rant, one would think that persistently low farm income should cause the market value of farm land to be relatively low. But the competition for available land among farmers, and from non-farmers as well, tends to keep the market value of arable land disproportionately higher than its productive value. Cities, airports, highways and industries gobble up large chunks of some of the best agricultural land, and, in the process, drive up the value of the adjacent land.

Urban sprawl is also forcing land prices up, as is the recent trend toward country living by professional people. Farmers, therefore, must often compete with highly paid professionals for the limited amount of available land. They must also indirectly pay the high wages of factory workers when buying farm machinery and they, more often than not, must borrow money to operate their farms and pay high interest rates for the privilege

Farm products, like all other goods, are subject to the basic economic law of demand … quantity demand is lower at higher prices and vise versa. But, demand for food, in total, fluctuates little when prices change since the total quantity of food that people consume remains relatively constant. However, quantities of specific foods consumed (apples, oranges, bananas for example) may change significantly with price fluctuation because one commodity can readily be substituted for another. The same is true of meats … when beef prices are high, in comparison to pork or chicken, for instance, pork or chicken will be substituted for beef until beef prices are driven down to more competitive levels.

Hundreds of experts are offering advice, making the rules and scheming for a piece of the action. For decades the bulk of their advice has been designed to promote larger and more efficient farming operations. The agricultural advisors, the lending agencies, the machinery companies and governmental agricultural policy makers all promote the trend to larger and larger farming operations with an ever increasing dependency on chemicals and greater mechanization. Ultimately this may result in the few remaining farmers being in a better bargaining position than they presently are, if they should choose to organize. But, in my opinion, due to the inherent independent and competitive nature of farmers, that's highly unlikely to happen in the near future…if ever. I say if ever because, in a democracy where only two percent of the population are farmers, the vast majority, who are non-farmers, is highly unlikely to permit a situation to develop in which the two percent could dictate food prices. The majority will obviously change the rules.

Granted, most, if not all, businesses have a variety of problems to cope with. There are certain risks and uncertainties associated with just about any way of making a living. But very few, if any, business enterprises have to contend with the variety of risks and uncertainties of the farmer. The weather is a prime example. Tourism, sports events et cetera can be just as dependent on the weather as farmers, but, although the weather effects everyone and every occupation to some degree, the fact is … farmers are constantly at the mercy of the weather. Prolonged periods of hostile weather can wipe us out. Weather anomalies, such as hail storms or tornadoes are merely nuisances, by comparison. But, obviously the weather is favorable most of the time, otherwise there would be no farmers.

It's difficult to make comparisons between farmers and factory workers, trades people and other blue collar workers, because these occupations have very little in common. For the same reason, it's just as pointless to compare farmers with professional people, such as school teachers and bankers. Farmers can only be compared logically with other business entrepreneurs.

Most businesses are able to set the price of the product or service they provide. Sure, they all must be competitive and deal with the effects of supply and demand, but most at least have some control and some bargaining leverage with regard to the selling price of their product or service.

Farmers, by comparison, do not have this advantage. Almost without exception, farmers make their plans and invest their time and money without benefit of knowing what they will receive in return. And, to further complicate things, most farmers must make decisions and commitments months, or even years, before any hope of a payoff. Once the seed is in the ground, the cow is bred or the new machine is purchased, there is no turning back. The commitment has been made and the farmer's future is on the line. To make matters worse, many farmers only have one payday per year.

But, to be fair, it must be pointed out that farmers, as a group, must take their due share of blame for their present predicament. Many farmers who are in trouble now are in that position because of their own bad management practices. However, blaming ones troubles on someone else is just as popular with farmers as with any other group. Pointing the finger at the bankers and politicians is a handy alibi for those of us who are not willing to admit to our own faults. Bad luck can be a factor, but I suspect that the majority of farmers who are in severe financial difficulty are the victims of at least some of their own bad decisions.

Having said that, it does not seem reasonable that farmers can be held responsible for all of the problems of agriculture. On the contrary, we can only be held accountable for a small part of the current crisis in agriculture. Hopefully, my attempt to identify some of those who must share the blame with us will put things into perspective and promote a better understand of why we farmers are in the position we find ourselves in today.

To be continued next time…

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Who am I?

I am a semi-retired farmer. I've been farming since 1962. Although I was born in Huxley, Alberta, I was raised in Washington State and moved back to Canada in 1962. In 1973 my oldest son, Guy, and I formed a partnership. Our farm is located about 4 miles south of Colinton. We presently farm nine quarter-sections of land. Our primary enterprise is beef calf production.